Covid-19 has accelerated insurance awareness in India. The findings of a Policybazaar survey show that unlike the past, insurance has now become a pull product. Consumers are likely to buy without the need for a big sales push. Even though people seem well in control of their financial health and matters, they are extremely worried about the risk to their and family’s physical health. As a result, the perception of the importance of life insurance is now higher than ever.



Life insurance protects your family and lets you leave them a non-taxable amount at the time of death. It is also used to cover your mortgage and your personal loans, such as your home loan. Your individual life insurance follows you when you retire and you are no longer insured by your employer. This insurance will also replace your family income when resources are less so they can maintain their quality of life.


You get tax-deferred growth!

As many know, life insurance is financial protection for your family and loved ones following your death. But did you know that some life insurance policies include something called a cash value that grows over time? And did you know that some of those policies allow you to access that cash value while you’re living? Permanent life insurance policies are life-long and have cash value that increases over time. These permanent policies contain a death benefit (or face amount), which is the amount paid at the time of death, and a cash value that grows over time on a tax-deferred basis, similar to retirement or tuition savings plans. This means you don’t pay taxes on any interest, dividends, or capital gains. This is on the cash-value component of your life insurance policy until you withdraw the proceeds.

However, you can also take advantage of tax benefits with a number of different retirement accounts, including IRAs.


How does cash value work?

The type of permanent policy you have will determine the way your cash value accumulates over time. While certain permanent policies also allow you to put extra money into the policy to increase your cash value, keep in mind that there are limits to how high your cash value can get in relation to your death benefit. If a policy is over-funded, it is deemed an investment and it loses its tax advantages. But don’t worry—your insurer will be monitoring the policy to make sure it’s within the guidelines.


If you’re maxing out your contributions to these accounts year after year, investing in permanent life insurance for tax reasons may make sense.